M.S. Research Paper by Jennifer McLean
University of Maryland, December 1997

III. Review of Existing Criteria

Until very recently, the Fair Trade movement was practically unheard of in the United States. While there are nearly 3,000 Fair Trade shops in England and Europe and tens of thousands of supermarkets carrying Fair Trade products, there are only a few Fair Trade merchants in the United States and Fair Trade products are not yet found in the supermarket. Why has the United States not seen a similar development? While broad notions of social justice and wage equity were entering the public forum on both sides of the Atlantic at the same time, the institutional development varied greatly. Europe�s Fair Trade movement began in local church groups, which have been traditionally activist in Europe. Fair Trade is only really visible in the United States in the pioneering Equal Exchange company in Massachusetts, which started selling coffee in 1986. One of the co-founders, Michael Rozyne, related the frustration in attempting to spread interest for Fair Trade in the US:

We�ve successfully established one small fair trade coffee business. Yet, we�ve made barely a dent in the volume of specialty coffee consumed in this country. At two separate times in the 90s, hoping to expand geometrically the fair trade volume in the United States, we tried to motivate a national fair trade seal for coffee. We wanted a vehicle that offered the fair trade program to others in the specialty coffee industry. Both efforts failed to rally the critical mass needed for lift-off. (Rozyne 96)

More sobering for those with a purely fair trade approach is the experience of Cultural Survival, one of the pioneers in non-timber forest product marketing. Cultural Survival concluded that conservation sells, indigenous rights do not, implying that the US market is more attuned to environmental messages than to social ones, and that it may be difficult to generate broad-based demand through purely social marketing message without the addition of a substantial ecological component. Organics, on the other hand, are grabbing market share in the US. (Saxenian 96)

Regardless of American indifference, Fair Trade coffee continues to gain market share in Europe. Coffee had been identified as good candidate for Fair Trade certification because it meets all of the following criteria for selection of a product, according to Barrat Brown (93):
- it is a product that is traditionally grown in the Third World (but see discussion in Section II, �Shade coffee and farmer independence�)
- it is a major source of foreign earnings
- can be sold as a whole product, not a component of something else
- is labour but not capital intensive (but see discussion in Section II)
- is not injurious to consumer health

Once a type of product is selected as a candidate for Fair Trade the particular criteria for certifying individual brands of the product are:
- buy direct from the grower as far as possible
- set a floor price that is above the market price
- offer credit
- pay an advance before the harvest (TransFair recommends an advance payment of up to 60% upon request of the producer).
- work for a long-term relationship. TransFair requires that producers and buyers draw a letter of Intent for future orders containing volumes, quality, price fixing procedures and shipping schedule for a period not less than one crop cycle
- open book policy, open communication

Critics of Fair Trade argue that a price premium is unsustainable, since as more producers join up, the comparative value of the cash premium disappears unless it is propped up by a subsidy. Conceivably this would happen if certified coffee got a large enough share of the coffee market that it was facing the paradox of having to put a premium above its own selling price. This could be solved by making the premium not a dollar amount but a floating percent in excess of the going world market price (New York terminal market) or the bonus could be in the form of community infrastructure and services, such as electricity of schools, whose value does not depend on comparison as cash does. (Although it could be argued that these non-cash benefits also derive value from comparison and that the only real wealth is food security and hence land tenure, which no price premium can give.)

Fair Traders themselves recognize that the approach of Fair Trade is at risk of being outmoded and therefore new policies need to be formed that are in tune with developments in the world trading system. The cherished price premium of Fair Trade can be rendered ineffective by developments in other policy arenas. For this reason, Fair Trade needs to keep a sophisticated policy watch on events in the European Economic Community (EEC), the US, and the World Trade Organization (WTO - the GATT institution). An example can be drawn from a similar product, Fair Trade chocolate. If the EEC changes its present regulations and allows for synthetic cocobutter to make chocolate, the negative impact on Fair Trade-supported cacao producers would be more than a tripling in the premium could cover (TransFair 96). In order for the price premium, the linchpin of the whole Fair Trade movement, to continue to work Fair Traders must become astute trade policy lobbyists in every major forum in the world. It would seem natural that anyone should be allowed to pay more than the going price for a product if they so elect. However, it is only a matter of time before a case will arise in which a Fair Trade (or other) price premium will be declared GATT-illegal or severely restricted like other �non-tariff trade barriers� such as subsidies . The threat of trade reprisals could pressure governments to enact laws that are hostile to non-governmental certification. TransFair has begun to prepare for such eventualities by joining a WTO watch group and lobbying the EC through it�s European member, EFTA; however, it is not clear whether, in the face of a GATT challenge, TransFair or the other Fair Trade groups would drop the price premium in favour of another tactic.

It is perhaps ironic that Fair Trade, which was essentially born of an ardent trade liberalization philosophy, could be endangered by Free Trade. It is equally ironic that some major indigenous peoples� groups in coffee-growing areas tend to oppose trade liberalization, for example Mexico�s Equipo Pueblo and the Frente Zapatista de Liberacion Nacional (FZLN 97). The indigenous coffee producer groups share members with the anti-liberalists but are themselves decidedly for trade liberalization. These oppositions are the concrete manifestations of the paradox of the imposed need to participate in the global economy paired with the desire for local autonomy. Fair Trade is perhaps to be commended for taking on this paradox at the risk of appearing hypocritical.

Organic

A survey of the US produce market in 1992 found that the niche for organic produce had grown 15% in one year (Rainforest Alliance 96). This niche has continued to grow but at a slower rate as organics compete with large agricultural interests for a larger share of the market. Over 80% of a sample of American consumers said they would prefer to buy organic if given the choice. Exactly what do consumers perceive to be �organic�? The common understanding is that organic means �all natural� or �nothing synthetic� - that no chemicals were used to grow the product and minimal if any chemicals were used in processing and packaging. However, in actuality, under several certifications, products can be certified organic that have been grown with restricted amounts of many synthesized chemicals. Even if consumers could be guaranteed the purest foods, what does this mean for the ecological health of the places where the food is grown? Certainly reducing or eliminating pesticides and artificial fertilizers will protect human health, benefit wildlife such as birds that feed in croplands, and improve water quality. However, organic standards in general hold consumer health and not land stewardship as the primary goal. This is changing with time, for example, standards for soil conservation have been included in at least one of the major bodies of standards (IFOAM 96). At any rate, it is important to remember that certified organic production does not necessarily mean the conservation of species and habitat.

In the absence of a rigorous �bird-friendly� standard for coffee farms, bird conservationists have pinned their hopes on organic certification with the assumption that organic usually means shade-grown since, without chemical inputs, the coffee crop is dependent on leaf litter, a shaded microclimate, and a robust insect predator population. The older, sun-intolerant varieties of coffee (e.g., Bourbon) produce fewer cherries but are also supposedly more pest resistant and less input-dependent. Shade-coffee and organic production indeed do seem to occur together but these two facts may not be related to each other so much as they are caused by a third factor - poverty. Farmers who cannot afford chemical inputs and high yield production, i.e., those who are described as �default� or �passive� organic, will also tend to spread their economic risk by keeping fruit and timber trees and growing coffee as a surplus crop. There is nothing to say that with a change in their circumstance - either increased or decreased security - a certified organic coffee farmer will remove some of the trees or switch to sun-tolerant, high-yield varieties of coffee. Thus the relationship between organic production and shade may not be reliable. With that caveat in mind, what are the merits and deficiencies of the current organic certifications and what bearing do they have on the goal of sustainable coffee?

There are three main bodies of standards or regulations for organic production that have or that can be expected to have a bearing on coffee certification. These are the European Economic Community (EEC) regulations, the US Organic Food Production Act (US Law), and the certification standards of the International Federation of Organic Agricultural Movements (IFOAM). The EEC and US Law are very similar in their requirements and procedures. This is no coincidence. Negotiations between USDA and EEC officials (USDA 93) resulted in an understanding that the US regulations currently being finalized (November 97) will be in accordance with EEC standards so that trade between these two markets will proceed more efficiently and the more established EEC standards will not be compromised by American imports. In the shadows of the EEC, US Law, and any other governmental standards is the Codex Alimentarius - basically a far-reaching international commodity agreement brokered by the UN, begun in the interest of public health and free trade and which covers a multitude of food products but not coffee. While the Codex does not explicitly deal with coffee, the relationships that drive it are the same that are shaping national standards for all agricultural products and therefore it is worth attempting to understand the Codex and how it might in the future include coffee.

An overview of each of the three main bodies of standards and a brief discussion of new approaches, including �self-certification� by roasters will help in appreciating the complexity of the present certification situation around the world, the gaps inherent in organic certification, and the challenges in attempting to create a new system of certification. (For an item-by-item comparison of the EEC, US, and IFOAM standards see the Appendix)

EEC.
The EEC regulations, at least in principle, recognize that organic standards can not only protect consumer�s health but also foster sustainable use of the land: �this type of production may contribute towards the attainment of a better balance between supply of, and demand for, agricultural products, the protection of the environment, and the conservation of the countryside� (EEC 1991). Certain aspects of the EEC criteria render them too general or temperate-focussed for coffee production. For example, the lists of permitted inputs for soil fertility and pest control are limited (only half a dozen botanical preparations) and particular to Europe. Small farmers in various coffee-growing locales are likely to use locally available or specialized inputs and these could be quite numerous or change with time. Although the EEC organic standards are based on the principle of environmental protection, there are actually no requirements for land stewardship except maintenance of soil fertility. At least 50% of the ingredients of a product must be organic for it to be labelled as EEC organic. Third country imports (this would include all coffee coming into Europe) can be labelled organic in the country of origin if that country is on a list of countries with approved organic certification programs.

USDA regulations.
Unlike the EEC, the proposed USDA standards are ostensibly only concerned with organic production as an issue of consumer protection and facilitation of trade. Critics of the proposed regulations (e.g., Pure Food Campaign 97, OCIA 96, NPR97) are disturbed that it would be illegal for private certifiers to uphold standards that are stricter than the USDA�s and that the USDA - maneuvered by American agribusiness - will use the principal of national treatment to force the EEC to lower its standards in order to open markets to American exports. The proposed USDA regulations are extensive, having been over seven years in the making. They will include comprehensive lists of permitted and excluded inputs and processes and detailed administrative rules for application of certification. (See table in Appendix). The USDA rules will in effect bring private certifiers into the government fold. Private certifiers will no longer be permitted to use the word �organic� on a food label or to display their certification mark. Certification under the USDA program will mean the word �organic� will be restricted to the ingredients list of a label and only after the full certification process by a USDA-approved inspector. US organic certifiers are divided as to the legitimacy and potential impact of the rules. Some certifiers are already promoting themselves as expert inspectors for the new rules. Products that are certified organic in another country may display the certifier�s mark provided that the certifier has been approved by the USDA as having regulations equivalent to the US program.

No coffee is presently certified by the US or EC governmental programs. However, at least one producing country is attempting to design its own national certification system that will be in compliance with the US and EC programs.

Codex Alimentarius.
The Codex Alimentarius is an international set of standards for food sponsored by the Food and Agricultural Organization of the UN. Although the official explanation for the Codex Alimentarius is that it is motivated by public health, harmonization of standards in the interests of global free trade is the motivation. The Codex has been designated by the WTO as the authority for setting standards for all internationally traded food products. There are trade penalties against member countries (whether producers or import/exporters of non-EEC products) who are not in compliance with standards for a listed commodity. Coffee is not one of the commodities under Codex regulation. However, the Codex has been conducting meetings to begin drawing up standards for organic products. For this and other reasons, the Codex may have some bearing on the organic coffee trade. The scope of the Codex is already broad enough that coffee could be considered under the purview of the Codex commission. For example, 1) coffee falls under the definition of food given by the Codex; 2) the Codex General Guidelines on Claims relates to claims made for a food �irrespective of whether or not the food is covered by an individual Codex Standard�. 3) Although there is no specific standard for coffee in the Codex, claims of �pesticide-free� of any food fall under the Conditional Claims rules of the Codex. 4) The Codex General Standard for the Labelling of Prepackaged Foods (1-1991) applies to all food. Therefore if a country gives full acceptance to this standard, that would imply that the standard must apply to prepackaged coffee

IFOAM.
The International Federation of Organic Agriculture Movements (IFOAM), headquartered in Germany, does not itself certify producers but instead accredits affiliate organizations in different countries. It is these affiliate organizations that actually certify farms. In addition to the basic standards (IFOAM 1996), which the national programs use to develop certification criteria, there are special guidelines on coffee, tea, and cacao; as well as guidelines on social rights and Fair Trade. The guidelines and the basic standards are described in the Appendix.

Like the EEC and proposed USDA regulations, IFOAM requires that the producer draw up a farm plan that documents the inputs and practices and that plant stock brought on the farm must be certified organic where possible. The list of prohibited and permitted inputs is comparable to the other two systems. Unlike the two governmental programs, however, IFOAM makes specific guidelines for land stewardship, including the regulating of cutting or burning, and, in the case of coffee, the planting of shade trees and composting of coffee fruit pulp. Products may be labelled �organic� if they contain at least 95% organic ingredients.

One thing to note about the preceding discussion is that all of the existing standards for organic production, with possibly IFOAM as an exception, are market-determined, not producer-determined. This is probably because organic certification began with the principle of consumer health. The high standards for public safety and health in Europe and North America would naturally lead to standards that are similar; what differences there are can be accounted for by political deal making of individual sectors in agriculture and the chemical industry. The existing standards are homogenous and somewhat rigid in their lists of permitted and prohibited inputs. While it makes some sense to have rigidity in prohibited inputs since human physiology is universal and some dangers posed by manufactured chemicals are universally accepted. However, attempting to list permitted inputs or activities ignores the diversity of production systems between countries and within countries and therefore has the effect of punishing communities that have unique production systems adapted to the local ecology. At least one effort is underway to forge a major new set of standards that originates with the producers and not in the market.

Bird Friendly (Shade Grown) Coffee
In November 1997, a little over a year after the Coffee Congress, the Smithsonian announced that it was endorsing the Eco-Organic Coffee Company�s �Cafe Audubon� as the first coffee to be certified under its bird-friendly guidelines. As explained previously, there is a connection between bird-friendly and organic but it is fortunate rather than causal. It is true that organic farmers (either actively or passively organic) tend to plant or keep shade trees since this slows the growth of the coffee plants - producing better beans, provides habitat for insect predators, and enriches the soil in the form of leaf litter and cuttings. However, as mentioned previously, it is not necessary - either in the physical or certifiable sense- that farms under organic production have shade cover. It is possible for a farm to be certified organic without having a single shade tree on it. The association of organic with bird-friendly therefore depends on a weak correlation observed in the field; there is actually no explicit criterion requiring shade.

However, the Smithsonian believes that the endorsement of a roaster who buys organic coffee is a step in the right direction. They have published shade management criteria for comment (SMBC 1997). Hopefully, this will motivate researchers and those in the coffee business to move towards defining shade criteria for certification. The proposed categories of shade are, in order of least to most bird habitat:
Rustic to traditional polyculture. This system consists of coffee grown under primary, or, more commonly, secondary forest growth. �Traditional� polyculture connotes a more cultivated �rustic� vegetation system in which additional useful tree species are planted. At least 24 species of fruit and timber trees were found in coffee farms of Nicaragua (Rice 96). To understand this system it is necessary to realize that in traditional indigenous systems there is no distinction between wild and domesticated plants and that some plants are weeded, tolerated, or encouraged depending on the household need, the relative abundance of the plant, and the season (see Alcorn 81, 84; Altieri 87). Trimming of the woody species is always done in the traditional system, to control the degree of sun and the humidity. The SMBC recommends a minimum canopy of 40% at noon and that epiphytes not be cut from the trees (SMBC 97) although others discourage epiphytes in order to get maximum production of the coffee and timber crop (Beer 87). It is strongly recommended that trees shorter and taller than the principal shade trees be planted, vertical structural diversity being positively correlated with bird diversity. They also urge that inspectors verify that these coffee farms aren�t actually grown in protected areas.

Specialized shade: The most common trees found on single-shade-tree coffee farms are species of Inga, fast-growing commercial species that are also nitrogen-fixing legumes. Other common planted shade trees are Erythrina and Gliricida - but these are leaf-shedding in the dry season and would not provide much bird cover or meet the 40% closed canopy criteria. Eucalyptus is also very common but would probably go against the SMBC guidelines since they discourage non-native trees. This is where the purists and realists part ways. On the one hand, planting Eucalyptus is certainly better than full sun since a sufficient canopy made by this introduced species can harbour resident and migratory birds (Daniels 90). On the other hand, not only have planted Eucalyptus been shown to have a negative impact on soil fauna and the herbaceous understory, due to overshading (Serralheiro 90, Suresh 88), but the tree is also an aggressive pioneer species that can invade disturbed habitat and outcompete native woody species.

Commercial polyculture: Inga and other planted tree species can form the backbone of a mixed crop of commercial trees. Ideally, a variety of Inga species (with differing flowering times) should be planted. The SMBC recommends that the tree plantings consist of no more than 50% of one species. At what point can planted agroforesty systems be considered �bird-friendly�? The SMBC recommends 10 species of trees or more on a farm to qualify. They do not give the rationale for this lower limit or what the eveness (number of trees of one species) or total tree density per hectare must be. (The 40% canopy rule, rather than stem density, seems to be the bird-friendly measure.) In addition to shade over coffee, the SMBC (as well as IFOAM) encourages the planting of hedgerows and living fences on the farm, as well as strips of buffering vegetation along waterways.

In addition to the non-causal association of shade with organic production, there is another potential problem of promoting certified organic coffee as bird friendly. In pairing up with organic coffee, the SMBC and other bird conservationists hoped to make use of an established venue in which to spread the word about shade coffee. However, for the Smithsonian endorsement to work their partner�s coffee must remain certifiable under the pending USDA regulations. It is quite likely that if the proposed USDA regulations pass public comment, SMBC�s partner and any future endorsed roasters will not be able to display the word �organic� on their labels or, at the least, will not be able to display the endorsement or seal of a third-party certifier. How then will SMBC, the American Birding Association, or any other conservation group be able to promote bird-friendly products? The USDA developments may force the conservationists� hand to get away completely from organic and focus their public awareness campaign on shade only. If, however, �organic� can somehow survive the new labelling rules by pairing up with �bird-friendly� than the organic producer - bird conservationist partnership may be mutually beneficial.

If private certification survives the USDA rules and if bird conservationists can verify that organic coffees come from well shaded farms than the bird-friendly approach may be on to something big. Marketing demographics suggest that appealing to birders is the way to sell shade-grown coffee. As many as 60,000,000 Americans call themselves �bird-watchers�, spending $2,500,000,000 on bird trips (some 24,000,000 trips) each year (Greenberg 96). Two-thirds of the bird species being watched by the coffee drinkers of the Eastern US migrate to the tropics. So coffee can help birds. Are the coffee farmers helped at all by the birds they host on their farms? Birds do not eat the coffee fruit (with a few exceptions). They do eat pests. In some areas (documented in Africa but not Latin America) the coffee is pollinated by birds.

Combined Criteria.
Two notable examples of balanced coffee criteria, those that cannot be categoried as either Fair Trade or Organic are worth mentioning briefly, Thanksgiving Coffee�s point system and Rainforest Alliance�s ECO-OK program for coffee. Rather than having an all-or-nothing certification, the Thanksgiving Coffee Co. of California has developed its own point system so as to recognized that different farms will have different desirable characteristics. A minimum of 10 points from a list of weighted ecological and social critiera earns the �Love the Earth� seal. For example, certified organic coffee plants earn 5 points, Fair Trade transactions a 4, co-operative produced a 3, and sun-dried a 2. The main criticism is that this is a system that is verified by the coffee buyer and is therefore unreliable.

The Rainforest Alliance of New York , who developed the SmartWood program for timber, began their ECO-OK certification for agriculture with coffee and expanded to specialized criteria for large citrus and banana plantations, including the entire Chiquita operation in Costa Rica. Certification is given to coffee production that
- is under shade
- has vegetational buffers to mitigate pulp pollution into rivers
- does not use persistent chemical pesticides
- provides minimum hygiene for workers and proper equipment
- is not the result of cleared primary forest
- uses fuelwood from prunings only.

The novelty of ECO-OK is that it opens certification to large, technified operations, thus pushing for progress in conventional agriculture. The criticism, however, is that the standards are too lenient and only echo already existing laws.

End of Section
Go back to Coffee Contact homepage
Continue to next section